NOTE: Monthly prices for gasoline, diesel and furnace oil are calculated by averaging price data available by fuel for each weekday of the calendar month. However, monthly prices for propane and natural gas are calculated by averaging weekly price data (Tuesday only) available by fuel for each calendar month. As a result, for propane and natural gas, this calculation is an imperfect representation of monthly prices and should be used with caution.

Explanatory Notes for Margin Calculations

Note: These margins calculations are approximations and do not reflect actual information from refiners. Therefore, actual refining margins may be different than those presented above.

Marketing margin: refers to the difference between the retail price of the refined product (before taxes are applied) and the wholesale refined product price:

Refining margin: refers to the difference between the wholesale gasoline price charged by the refiner and the price of crude oil (including transportation costs) which is a key input in the refining process:

Refineries in Canada have access to, and use different types of crude oil as feedstock to produce refined products.
Refining margins have been developed for the following three regions (also known as supply orbits):

Western Canada;

Ontario; and

Quebec and Atlantic Canada.

The Canadian average refining margin is a weighted average of these three regions. The weights are calculated using an average of each region's aggregated refinery throughputs in 2015 which can be found in the National Energy Board's Weekly Crude Run Data.

Simplifying Assumptions for Crude Oil Prices

The crude oil price, which is used to estimate the refining margin, is calculated based on three factors:

1. Crude oil feedstock

There are two main types of crude oil: light and heavy; and

Light crude oil requires less processing to be refined into petroleum products; however, it tends to be more expensive than heavy crude oil which requires additional equipment and investment to refine.

2. The price of crude oil

To ensure accuracy, the price for each type of crude oil used in this analysis is determined by taking an average of reported prices drawn from both public and private sources. A representative source for the price of each crude type is identified below.

The price for each type of crude oil is then weighted by its share of the feedstock blend to calculate a representative price for the region.

3. Transportation costs

Where applicable, crude oil transportation costs have been identified for each region.

Western Canada

Crude oil feedstock

Refiners in Western Canada currently use a blend of feedstocks consisting of:

69% light crude; and

31% heavy crude.

Crude oil prices

Given that the majority of the light crude used in Western Canada consists of synthetic crude oil from upgraders, the reference price used for the light crude oil in this region is Synthetic Crude Oil; and

In Western Canada, crude oil prices are not adjusted to reflect transportation costs since refineries in Western Canada are typically located close to oil production areas.

Ontario

Crude oil feedstock

Refiners in Ontario currently use a blend of feedstocks consisting of:

85% light crude; and

15% heavy crude.

Crude oil prices

In Ontario, the majority of the light crude comes from domestic conventional production, and therefore the reference price used for the light crude oil is Canadian Light Sweet;

Note that in the attached link, the Canadian Light Sweet price is available as a differential to West Texas Intermediate (WTI), therefore to compute the Canadian Light Sweet price, the WTI price must also be collected for the same date; and

Notes on Crude Oil Prices

All crude oil prices used in the above calculations are settlement prices, for delivery in the prompt month. Prices can be converted from dollars per cubic metre to cents per litre by applying the following ratio (100:1000).

Canadian Light Sweet: Canadian Light Sweet (CLS) is the main Canadian benchmark price for light sweet crude and specifies delivery at Edmonton, Alberta. Prices are based on daily closing prices for CLS crude posted on NYMEX in US dollars per barrel. Prices are converted to Canadian dollars per cubic metre using the Bank of Canada's daily noon exchange rate and applying a volumetric ratio (6.29:1) to convert the price per barrel to a price per cubic metre.

Edmonton Synthetic Crude: This is the main Canadian benchmark price for synthetic crude oil and specifies delivery at Edmonton, Alberta. It is typically priced on a differential basis to West Texas Intermediate (WTI) crude oil, at Cushing, Oklahoma in U.S. dollar per barrel. Prices are converted to Canadian dollars per cubic metre using the Bank of Canada's daily noon exchange rate and applying a volumetric ratio (6.29:1) to convert the price per barrel to a price per cubic metre.

Brent Montreal: Brent is the main benchmark price for light sweet crude in international markets and specifies delivery at Sullom Voe terminal, United Kingdom. Prices are based on daily closing prices for Brent posted on NYMEX in U.S/ dollars per barrel. Prices are converted to Canadian dollars per cubic metre using the Bank of Canada's daily noon exchange rate and applying a volumetric ratio (6.29:1) to convert the price per barrel to a price per cubic metre. Transportation costs are added for shipping Brent crude by tanker to Portland, Maine, where it is transferred to a pipeline and transported to Montreal. Tanker rates are obtained from Bloomberg and pipeline toll rates are obtained from the National Energy Board (NEB) and the US Federal Energy Regulatory Commission (FERC) which regulate pipeline tolls in Canada and the U.S. respectively.

Western Canada Select: Western Canada Select (WCS) is the main benchmark price for Canadian heavy crude and specifies delivery at Hardisty, Alberta. Prices are based on daily closing prices for WCS posted on NYMEX in U.S. dollars per barrel. Prices are converted to Canadian dollars per cubic metre using the Bank of Canada's daily noon exchange rate and applying a volumetric ratio (6.29:1) to convert the price per barrel to a price per cubic metre.